The top management of both the Pakistan Stock Exchange (PSX) and the Securities and Exchange Commission of Pakistan (SECP) was aware of the recent Rs 1.5-1.75 billion scam, Pakistan Today has learnt.
It was in the knowledge of the then acting chairman SECP, Tahir Mehmood, and top management of PSX, including its Managing Director Nadeem Naqvi, that Wamiq Mohammad Yousuf was using accounts of M/s Zafar Moti Securities and M/s Adam Securities and was committing fraud with investors as a front man of brokerage firms.
During an investigation conducted in May 2013 against M/s Zafar Moti Securities, the SECP had already issued a warning letter to Wamiq Yousaf as his account did not match the said brokers and investors accounts. Since that time, he was committing fraud with investors, but neither did the then SECP chairman nor the Managing Director PSX take any action against him or both TREC brokers.
According to the documents of SECP, Wamiq Yousuf was running his account through Adam Securities and Zafar Moti Securities but “his orders for buy or sell were not being transferred to the accounts of shareholders.”
Now, when such a big fraud has been committed and Rs 1.5 – Rs 1.75 billion of the investors has been washed out, Chairman SECP and top management of PSX are blaming the naivete of the investors for trusting a fake broker, saying, “Wamiq was not a broker (TREC holder) and we cannot take this responsibility.” Wamiq was issued his own book accounts by the SECP and he was dealing with Zafar Moti at that time. SECP had sent a warning letter to Wamiq at his home address in Nazimabad.
One broker said, “Why didn’t the SECP and top management of PSX take action in May, 2013, against Wamiq Yousuf or Zafar Moti Securities and Adam Securities? If they had been held accountable at that time, the regulators could have saved the investors millions of rupees.” Both TREC brokers are still active and making money from the stock market.
SECP and PSX have so far agreed that several TREC holders (Securities companies) are still running double books but both regulators did not disclose their names and claimed that they are still investigating them.
The Federal Investigation Agency (FIA) arrested Wamiq Yousuf following an FIR registered on Feb 6, 2017. The FIR claimed, “Yaser Manzoor, Head of Department (SSED) of SECP had given permission to FIA to take necessary legal action against accused (Wamiq) as he is not a registered or licensed person/entity of SECP.” However, it seems that the SECP did not give permission to take action against the owners M/s Zafar Moti and M/s Adam Securities, who were also the main accused in all scam as they were TREC holders nor the SECP and PSX suspend their licenses.
The sources said that Zafar Moti, Haroon Askari and others got pre-arrest bail in this FIR and were planning to fly from the country.
However, in Saturday’s statement, Chairman SECP Zafar Hijazi said that the commission has reported a local stockbroker, MR Securities, to international securities regulators through International Organisation of Securities Commissions (IOSCO). The brokerage house has also been reported to the Financial Monitoring Unit to initiate action under the Anti-Money Laundering Act, 2010.
The SECP, in its statement a few days back, had accepted that PSX had suspended licenses of nine brokerage firms till now, without mentioning their names. In May 2016, the PSX suspended a license of Stock Street Securities (Islamabad) but the investors of this brokerage house are still waiting for their money. While in February 2017, PSX suspended licenses of MR Securities of Lahore, AWJ Securities of Islamabad and MAM Securities of Islamabad. The PSX asked the investors to submit their claims with all necessary documents.
FIA’s Investigation officer (IO) Siraj Panhwar said that he was not allowed to speak on this issue and recommended to contact Director FIA, Sindh. However, the other sources in FIA said that he (Wamiq) was arrested by police in 7-8 equity fraud cases on October 28, 2016, and that the FIA took him into custody about two weeks ago. “During the interrogation, he had disclosed the names of brokerage firms and their owners and accepted that he was the front man of Zafar Moti, Adam Securities and other brokers,” an FIA official said.
In the FIR lodged by the FIA, Wamiq Yousaf committed a fraud of Rs 51.365 million with six people. His main office was located in the main building of Karachi Stock Exchange in Room number 67 and 74 for the last 20 years. He was on rent there but some sources said the offices belonged to Zafar Moti. The FIR lodged by the FIA included the names of Wamiq Yousaf, Danish and his accomplices, including stock members Haji Majeed, Noman Adam, Zafar Moti and Haroon Askari, who provided him support and shelter under the relevant laws.
Sources in the Industry said the accused was dealing with more than 400 clients till Oct 2016 from his office and after that, both offices had been locked. It is also learnt that the investors belonged to the US embassy Karachi, Pakistan Army and others.
The FIR said that he was sending depositors’ money to USA (Maryland) in the account of his brother Adil Yousuf and sister Eshrat Yousaf in England through Hawala and Hundi.
Major complainant of the FIR was Wali Ahad, who initially made an investment of an amount of Rs 3.5 million and after he invested in shares of Engro Food and KAPCO, the said amount was raised to Rs 160 million.
Other complainants were Mrs Nighat Khawar of Rs 5 million, Syed Naushad Ahmed Rs 16.375 million, Imran Saleem Rs 4.190 million, Syed Danish Shah Rs 13.400 million and Mrs Shahnaz Ahmed Rs 8.9 million. The amounts of these investors were actually not invested in the share market (PSX), but Wamiq Yousaf cheated the clients using the name of the stock markets and sent this amount out of the country or invested it in his own property business in Pakistan, the FIR further stated. When contacted, the SECP officials did not comment on the issue nor did Managing Director Nadeem Naqvi take any action against these brokers (Zafar Moti) and the others.
On a reference filed by the SECP, the National Accountability Bureau (NAB) has arrested Hassan Waheed Khan, Director AWJ Securities Private Limited last week and raided the company office to seize all the relevant records. The SECP officials were accompanied by the NAB officials, the sources in SECP informed.
NAB Rawalpindi presented the arrested director of the said brokerage firm at NAB court and secured a 10-day physical remand for investigations.
The SECP and PSX noted with concern that some brokerage houses were engaged in the illegal activities of raising deposits from the public/investors against a promise of fixed rate of return under the umbrella of stock market investments.
It was agreed that the said activities of brokers were illegal and tantamount to defrauding the public. It was also emphasised that the investors and the public should be cautious of these illegal activities and should not engage themselves or be a party to any such illegal investment activities.
